Gold maintained its near-term range-bound trading action and is now heading back towards the lower end of the trading range.
Currently trading around $1252 level, the ongoing bullish sentiment surrounding the greenback is restricting any swift recovery for the dollar-denominated commodities – like gold. Further downside, however, remained limited, despite of the recent greenback appreciating move, as some analyst now think that the Fed might deliver a dovish hike in December.
Given that the precious metal has held up again a broadly stronger greenback, a minor US Dollar retracement would now favor bulls and could assist the metal to move back above 200-day SMA.
Carol Harmer, Founder at charmertradingacademy.com, notes, "Gold has made a small pennant within a bear run…Now as this is a continuation pattern we have to assume Gold is taking a breather…and will start to move lower within the prior trend which is currently lower….We will know if this pennant fails to follow through if we break above 1265…Only if we do that will the market have the legs to trade higher and then we would be looking at/ 1272."
Today's manufacturing data from the US might provide some short-term momentum play, while the greenback price dynamics might continue to be the key determinant of the commodity's near-term trajectory.
Important technical levels
Harmer further notes, "currently the pattern is a continuation bearish pattern with the break point at 1245…If therefore we break 1245 it will fulfil the pattern and break to 1172 as the measured target…..Now as you know….measured targets are great…but you have to be aware of quite major chart points….and the weekly chart point is 1210….from the weekly fib levels…..and also 2 intersecting trendlines…so you are going to see short covering and fresh buyers coming in at the lower levels looking to defend the 1200 roundfigueitus number….Now spookily 1172 is the weekly 61,8 Fib…so please…all shorts are to be covered and longs re-instated down at these lower levels…."